U.S. Commodity Futures Trading Commission v. Southern Trust Metals, Inc., 880 F.3d 1252

Southern Trust (owned by Loreley and holding co.) marketed physical precious-metals investments and charged storage/loan fees but in fact routed customer funds to Loreley and then to foreign brokerages (Berkeley, Hantec) that traded OTC futures, not physical metals.
Accounts at Berkeley and Hantec were in Loreley’s name; customers were not told of the transfers or that investments were in futures; no deliveries of physical metals occurred and no loans existed despite interest charges.
The NFA investigated and settled with the defendants; the CFTC then brought its own enforcement action alleging unregistered futures dealing, off-exchange transactions, and fraud (leveraged-metals scheme and unregistered-futures scheme).
The district court granted summary judgment for the CFTC on registration/off-exchange claims, found fraud after a bench trial, imposed injunctions and civil penalties, and ordered restitution for investor losses from both schemes.
On appeal, the Eleventh Circuit affirmed liability, injunctions, and restitution for losses tied to the leveraged-metals (fraud) scheme, but vacated restitution tied solely to the registration violation and remanded for consideration of other equitable remedies.

Issue	CFTC's Argument	Defendants' Argument	Held
Whether NFA settlement estops CFTC	N/A — CFTC proceeded; NFA settlement doesn’t bind government	Settlement with private regulator bars CFTC enforcement (equitable estoppel)	Rejected: private settlement doesn’t preclude government; no govt. misconduct and reliance disputed
Whether defendants violated CEA registration and off-exchange rules	They failed to register as FCMs and transacted off-exchange	Actual delivery exception applies; transactions were deliveries of metals	Affirmed: no actual delivery; exception not established
Whether defendants committed fraud under 7 U.S.C. §§6b/9 and 17 C.F.R. §180.1	Misrepresentations/omissions (physical metals, loans) were material, with scienter and causation	Argued lack of knowledge/creditable explanations (foreign brokers misled them)	Affirmed: misrepresentations, scienter, and materiality proven; fraud established
Whether restitution is available for losses from registration violations	CFTC sought restitution for all investor losses, including those who intended futures	Registration violation alone caused losses; proximate cause lacking	Partially reversed: restitution vacated for losses tied solely to registration violations; restitution stands for leveraged-metals fraud losses; remand to consider disgorgement/other remedies

U.S. Commodity Futures Trading Comm’n v. Hunter Wise Commodities, LLC, 749 F.3d 967 (11th Cir. 2014) (defines "actual delivery" and analyzes misrepresentations about metals storage)
Commodity Futures Trading Comm’n v. R.J. Fitzgerald & Co., Inc., 310 F.3d 1321 (11th Cir. 2002) (elements of CFTC fraud claim: misrepresentation, scienter, materiality)
Wilshire Inv. Mgmt. Corp., 531 F.3d 1339 (11th Cir. 2008) (standard of review and injunction analysis under CEA)
Bank of America Corp. v. City of Miami, 137 S. Ct. 1296 (2017) (proximate-cause must show a direct relation; foreseeability alone insufficient)
Hemi Group, LLC v. City of New York, 559 U.S. 1 (2010) (proximate-cause limitation: generally not beyond first step in causal chain)
Alvarez v. United States, 862 F.3d 1297 (11th Cir. 2017) (unregistered status alone did not cause investors’ losses; fraud was the causal source)